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Despite High Expectations for Digital Transformation Led by Cloud, Analytics, Robotic Process Automation, Cognitive & Mobile, IT & Other Business Services Areas See Low Capability to Execute

[March 16, 2017]

Despite High Expectations for Digital Transformation Led by Cloud, Analytics, Robotic Process Automation, Cognitive & Mobile, IT & Other Business Services Areas See Low Capability to Execute

A wide confidence gap exists between the high expectations for digital
transformation's business impact and the low perception of the
business's capability to execute digital transformation, according to
newly-released Key Issues research from The
Hackett Group, Inc. (NASDAQ: HCKT)

This confidence gap is even larger in IT than in most other areas
covered in the study - finance, procurement, and HR. The low confidence
has not slowed the momentum of growth in digital transformation, which
is expected to grow dramatically in the next two to three years. But it
does raise serious questions about how successful digital transformation
efforts will be, and represents a call to action to IT to invest in the
necessary tools and talent.

"IT isn't alone in falling short when it comes to the ability to fully
address digital transformation," said The Hackett Group Chief Digital
Officer & Cofounder Allan Frank. "The rest of the enterprise is also
fairly unprepared. But IT's situation is unique, as it should truly be
providing a road map. Digital transformation requires a holistic view,
and both vertical and horizontal integration. IT is in an excellent
position to provide this view, and should be teaming with the other
business services functions to elevate digital transformation
capabilities."

Digital transformation is defined as changing the way organizations
create value, innovate, deliver products and services, engage with
stakeholders and execute work, through the pervasive use of technology,
improving operational efficiency, agility and customer experiences.

While 80 percent of business leaders agree that digital transformation
will fundamentally change their company's operating model, less than 40
percent have a strategy or competencies needed to execute that
transformation, The Hackett Group's research found. All the business
services functions in The Hackett Group's 2017 Key Issues Study - IT,
finace, procurement, and HR -- said they expect to see digital
transformation driving fundamental changes to operating models,
industries, competitive landscapes and more. Yet only about a third of
all study respondents said they believed their company has an
enterprise-level digital transformation strategy, and only about 40
percent said their company has the necessary resources and competencies
to execute digital transformation. IT showed one of the largest
confidence gaps among the functions studied by The Hackett Group.

The study also examined current and future adoption rates in an array of
transformative digital technology areas, including cloud-based
applications and infrastructure, cognitive computing, robotic process
automation, advanced analytics, and predictive cybersecurity. While
planning and adoption rates in most of these areas was fairly low, it
has doubled in the last year, and most companies were expecting to
achieve limited or mainstream adoption in the next two to three years.

The Hackett Group's research also found very high levels of exposure to
a broad range of business risks and sharp projected increases in these
same risks over the next two years. The top four areas of projected risk
- cyber-security, intensified competition, disruptive innovation, and
access to critical talent - are all related to structural transformation
of the business, which in today's world is inevitably digital in nature
and driven by technology innovation. Cybersecurity surpassed competition
to become the top risk for 2017.

"The confidence gap in digital transformation presents IT with both
challenges and opportunities," said Richard Pastore, senior director and
IT research advisor. "IT must close the gap by transforming its own
competencies and services, and positioning itself as a transformation
guide and partner. Some of the most critical transformations that IT
will be working on in 2017 include adopting rapid application
development techniques and a variable-speed development model. IT will
also be improving its customer-centric innovation capability, working
backwards from end-customer needs to introduce innovative technology to
the business. And IT plans to enable enterprise analytics by modernizing
data platforms to manage ever-increasing data complexity."

The Hackett Group's 2017 IT Key Issues research, "Closing the Digital
Transformation Confidence Gap in 2017," is based on results gathered
from executives from more than 180 large companies in the US and abroad,
most with annual revenue of $1 billion or greater.

The Hackett Group has completed more than 11,000 benchmarking studies
with major corporations and government agencies, including 93% of the
Dow Jones Industrials, 86% of the Fortune 100, 87% of the DAX 30 and 52%
of the FTSE 100. These studies drive its Best Practice Intelligence
Center™ which includes the firm's benchmarking metrics, best practices
repository, and best practice configuration guides and process flows,
which enable The Hackett Group's clients and partners to achieve
world-class performance.